|Data for week commencing 29 April 2019|
US stocks dived on Thursday following a night’s sleep on the Fed’s official comments on interest rates. And the market again had become fixated on one word. Around Christmas, the word was “patience” uttered by the Fed boss, Jerome Powell. This week it was “transitory”.
Using this word when it came to the current state of inflation meant that the market started to doubt its recent view that rates were on hold for a long time and the next move could/should be down. Instead, Powell was showing a sign that he wasn’t under Donald Trump’s thumb on rates and that if economic activity was stronger and inflation was threatening, he might rate interest rates, as all good central bankers would.